Conventionally, the trade of corporate bond securities in the marketplace is difficult and inefficient. If an institutional investor wanted to trade corporate bond securities, he or she would have to contact bond market banks to assist in completing a trade. Then the bank, for instance, would manually locate an interested party willing to place a bid for the securities in question. The bank, in these cases, effectively operates as a matchmaking party. Unlike publicly-traded stocks, there is no public market, such as the New York Stock Exchange (NYSE), through which parties may efficiently trade corporate bond securities. As a result, it is not only difficult to locate two parties that are interested in trading the same corporate bond security, but also who are also willing to trade a particular number of securities at a fair market price.
Indeed, without a public market (exchange), it is extremely difficult to ascertain the true fair market prices for a given security. Because trades are created through a manual, private process between two private parties, there is no transparency in the marketplace, making it further difficult for trades to be completed. Furthermore, interested parties are disincentivized from revealing too much information to other parties in the marketplace out of tear that it would lead to bias or predatory behavior. For example, if a party reveals that he/she is interested in selling a certain security, other parties who gain this information can engage in predatory, behavior with respect to that security.
Even if there were a public marketplace for corporate bond securities, many institutional investors do not have the time to track the market value of particular securities throughout a given day. There remains no viable solution that allows for trades to be completed automatically between two parties at a fair, optimal price while keeping the confidentiality of the parties.
Another shortcoming of prior solutions was the difficulty in locating interested traders in the marketplace, thereby further disincentivizing trades. There remained no central location through which bids and offers may be publicly provided to all interested parties. Thus, even if an institutional investor were interested in placing bids for certain securities, there was no solution that can facilitate the identification of bonds that the trader would likely be interested in, e.g., based previous transactions, user-definable parameters, and other information.
In view of the foregoing, there are significant problems and shortcomings associated with currently available trading solutions, especially those in the market for corporate bond securities. Accordingly, the inventors recognized a need in the art for an automated electronic trade system to facilitate security trades in a variety of transaction types while maintaining party confidentialities.